Electricity, FERC, Gas-Electric Interdependency, Natural Gas

FERC Rule on Coordination of Natural Gas and Electric Scheduling Finalized as Industry Interdependency Grows

nsilcock051100038The electric industry is becoming increasingly reliant upon natural gas as a fuel source in the midst of our nation’s abundant natural gas resources and aggressive regulatory efforts to reduce the environmental impact of power plants.  The U.S. Energy Information Administration recently reported that the use of natural gas as a fuel for electric power generation, referred to as “power burn,” hit record levels this winter.  Through a multi-year effort that engaged industry stakeholders, the Federal Energy Regulatory Commission (“FERC”) set out to facilitate the coordination of the scheduling practices of the natural gas and electric industries to accommodate the industries’ growing interdependency.  On April 24, 2015, FERC’s final rule on Coordination of the Scheduling Processes of Interstate Natural Gas Pipelines and Public Utilities (“Final Rule”) was published in the Federal Register, triggering a July 8, 2015 effective date.  FERC issued its Order No. 809, adopting the Final Rule the week prior.  Our posts have tracked the detailed development of the Final Rule through the North American Energy Standards Board (“NAESB”) Gas-Electric Harmonization Forum (“GEH Forum”) process, which aimed to develop a consensus response to FERC’s original proposal.  We highlight the parameters of the Final Rule here, which largely incorporate by reference the revised standards adopted by NAESB coming out of the GEH Forum.

The Final Rule:  In finalizing the rule, FERC explicitly incorporated by reference the standards developed by NAESB through the GEH Forum process and decided to abandon its original proposal to make the start of the Gas Day earlier after considering comments and the information submitted by ISOs and RTOs in response to FERC’s December 2014 data requests.  The NAESB standards were silent on the time of the Gas Day start, leaving that determination to FERC.  FERC ultimately concluded that it “is not clear that requiring a change in the Gas Day start time would provide sufficient benefits to outweigh the operational and safety impacts and costs of making such a change.”  FERC noted that continuing regional efforts may be more effective in addressing any particular related concerns.  The key components of the Final Rule include:

  • Gas Day Start: The start of the Gas Day will not be changed, despite FERC’s original proposal to make it earlier.  The Gas Day still will begin at 9 a.m. Central Clock Time (CCT). FERC instructed NAESB to change its standards to reflect the start of the Gas Day at 9:00 a.m. CCT and FERC will incorporate the revised NAESB standards in an instant Final Rule.
  • Timely Nomination Cycle: The nationwide Timely Nomination Cycle nomination deadline for scheduling natural gas transportation will be changed from 11:30 a.m. CCT to 1:00 p.m. CCT; and notice to shippers of scheduled quantities will be provided at 5:00 p.m. CCT, instead of the current 4:30 p.m.
  • Evening Nomination Cycle: The nationwide Evening Nomination Cycle nomination deadline will remain 6:00 p.m. CCT, but notification to shippers of scheduled quantities will be provided at 9:00 p.m. CCT instead of the current 10:00 p.m. CCT.
  • Intraday Nomination Timeline: The intraday nomination timeline will be revised to add a third intraday nomination cycle and adjust the timeframes and bumping status of the cycles as reflected below:

FERC Final Rule

  • Multi-Party Contracts: The Final Rule allows for natural gas pipeline customers to enter into multi-party contracts for firm transportation in order to facilitate the efficient sharing of pipeline capacity without subjecting shippers to capacity release regulations.  The rule does not require all pipelines to make multi-party contracts immediately available via tariff revisions, but rather requires only those pipelines who receive requests from shippers to do so within 60 days of a request.

Compliance Timeline:  FERC wanted to provide pipelines enough time to implement the Final Rule’s changes.  Therefore, interstate natural gas pipelines will not be required to begin operating under the new standards until April 1, 2016, with tariff filings reflecting the changed standards due by February 1, 2016.  For the electric industry, however, FERC’s March 2014 Section 206 Order requires that within 90 days after publication of the Final Rule in the Federal Register, each ISO and RTO must propose tariff revisions “to adjust the time at which the results of its day-ahead energy market and reliability unit commitment process (or equivalent) are posted to a time that is sufficiently in advance of the Timely and Evening Nomination Cycles, respectively, to allow gas-fired generators to procure natural gas supply and pipeline transportation capacity to serve their obligations” or to show cause why its current scheduling practices do not require modification.

Brian Heslin

About Brian Heslin

Brian Heslin represents energy companies in regulatory proceedings at the state and federal level. In addition, he provides advice on busines and strategic planning, upstream natural gas supply and capacity negotiation, compliance and other related services.

Discussion

No comments yet.

Leave a comment

Your email address will not be published. Required fields are marked *

Welcome to the Energy Interdependency Blog!

The landscape of the energy industry is rapidly changing, with a focus on the development of clean, domestic energy sources and a secure, reliable energy infrastructure driving significant changes in the interdependency of energy industry segments and an increase in government regulation. Continued growth in the domestic production of oil and natural gas has positioned the U.S. to be an energy exporter in the global market and will have a marked impact on the course of the industry’s development.

The Moore & Van Allen Energy Interdependency Blog seeks to inform companies navigating the domestic and global energy markets by providing leading-edge insight on issues critical to energy interdependency and developments in energy policy, regulation, and related litigation.

Connect to Recent Authors

  • Brian Heslin:  View Brian Heslin's Bio View Brian Heslin's LinkedIn profileFollow @BrianHeslin on Twitter
  • Mindy Vervais:  View Mindy Vervais’ Bio View Mindy Vervais’ LinkedIn profile

  • Subscribe to Blog Via Email

    Follow MVA

    Facebooktwitterlinkedinrss

    Blog Topics

    Archives


    Our Energy Practice

    Headquartered in the burgeoning energy hub of Charlotte, NC, Moore & Van Allen has an extensive energy practice that is national and international in scope. Our energy team is composed of highly-skilled attorneys from a cross-section of legal disciplines with a thorough understanding of the complex technologies, transactions, and regulations inherent to the energy industry and its various segments, including natural gas & LNG, electricity, oil, water & sewer, telecommunications, and alternative energy & green technology.

    We leverage our significant experience to guide our clients successfully through the intricacies of their businesses, from marketing, compliance counseling, and project development, to project finance, federal and state regulation, investigations and litigation. We proudly and successfully serve companies throughout the nation, including the largest natural gas and electric companies in the Carolinas. Read More About Our Practice and Meet the MVA Energy Team.

    Disclaimer

    No Attorney-Client Relationship Created by Use of this Website: Neither your receipt of information from this website, nor your use of this website to contact Moore & Van Allen or one of its attorneys creates an attorney-client relationship between you and Moore & Van Allen. As a matter of policy, Moore & Van Allen does not accept a new client without first investigating for possible conflicts of interests and obtaining a signed engagement letter. (Moore & Van Allen may, for example, already represent another party involved in your matter.) Accordingly, you should not use this website to provide confidential information about a legal matter of yours to Moore & Van Allen.


    No Legal Advice Intended: This website includes information about legal issues and legal developments. Such materials are for informational purposes only and may not reflect the most current legal developments. These informational materials are not intended, and should not be taken, as legal advice on any particular set of facts or circumstances. You should contact an attorney for advice on specific legal problems. (Read All)